Indian Minister Denies Looting a Problem in Food Program

Children hold bowls of sprouts outside their home in the Dharavi slum area of Mumbai, India. The government will spend a record $14 billion this fiscal year on wheat, rice and other food, adding to an 82 million ton stockpile in a country where half the children and one in five adults are malnourished. Photographer: Dhiraj Singh/Bloomberg

Oct. 22 (Bloomberg) -- India’s system of distributing food
to the poor isn’t corrupt, according to Food Minister K.V.
Thomas, who rejected findings by the World Bank, Supreme Court
and news investigations that rampant theft is depriving as many
as 160 million families of nourishment.

About 5 percent to 10 percent of the food meant for the
poor is lost, and that is due to mismanagement, Thomas said in
an interview at his office in New Delhi. The World Bank pegged
the figure at 58 percent, in a 2011 report based on government
data, and blamed it on graft and wastage. A Supreme Court fact-finding commission declared in the past year that the
distribution system in major states had failed in its mission.

“I am not concerned about the World Bank,” said Thomas.
There is “some kind of mismanagement there, I do agree with
that, but not to the extent of an alarming stage,” the minister
said, growing visibly angry at questions on corruption before
abruptly ending the half-hour interview. “I don’t agree with
the word corruption.”

The government will spend a record $14 billion this fiscal
year on wheat, rice and other food, adding to an 82 million ton
stockpile in a country where half the children and one in five
adults are malnourished. While some rots in inadequate storage
facilities, still more is siphoned off by corrupt politicians
and their criminal gangs, data compiled by Bloomberg in August
showed. As much as $14.5 billion of food meant for the poor was
looted over a decade in the state of Uttar Pradesh alone.

‘Shocking’

“It is shocking that someone in his position is not
willing to accept the scale of the problem,” said Naresh
Saxena, a commissioner of the Supreme Court who monitors hunger-based programs across the country. “I think he is very badly
misinformed. This is a very worrying sign.”

Sitting behind a large, wooden desk in his office
overlooking the Rajpath, the ceremonial avenue running between
the presidential palace and the memorial arch called India Gate,
Thomas grew increasingly agitated at questions about the
failings in the system he has overseen for the past two years.

Thomas said it wasn’t his responsibility to probe
individual cases of corruption and it was down to the state
government to ensure the food reaches the poor and the national
government only delivers grain from warehouses.

“I don’t depend on news stories,” he said in the Oct. 17
interview.

When asked whether he was surprised by the level of
corruption in the distribution system and whether he felt
frustrated by his inability to combat it, Thomas asked to change
the topic. “Let us forget about this and leave this subject,”
he said.

Food Corporation

India has run the world’s largest public food distribution
system for the poor since the failure of two successive monsoons
led to the creation of the Food Corporation of India in 1965. As
the country moved from a precarious existence depending on
monsoon rains and overseas aid to one of surplus and exporter-status today, it has largely failed to dent some of the world’s
worst malnourishment statistics.

The Planning Commission, a governmental body that assesses
the country’s resources in the struggle to improve living
conditions, asked the World Bank in 2005 to survey India’s
social security safety nets. The commission had already found
that 36 percent of subsidized grains were “siphoned off the
supply chain.” In fiscal 2004, $791 million worth of food, out
of $1.4 billion set aside for 16 states, didn’t reach the poor.

Fake Cards

The World Bank used data from the commission and the
National Sample Survey Organization, a branch of the Statistics
Ministry. Among the findings of the bank’s report, only
published last year, was that as much as 36 percent of the food
meant for those below the poverty line in the early 2000s was
diverted or disappeared in the distribution channels set up by
the government. A further 22 percent was sold to people with
fake ration cards, who did not qualify for the subsidy.

Using another method, comparing the amount of rice and
wheat given to each state to distribute with the amount citizens
reported buying from ration stores, only 41 percent of the food
meant for the poor was consumed by them in 2005.

While there were wide variations across states, the World
Bank had noticed some improvement over time, according to an e-mailed statement from New Delhi-based lead economist John
Blomquist.

“Nonetheless, overall, the leakage rates remain relatively
high for India as a whole,” said Blomquist.

‘Gigantic Proportion’

A continuing examination of the public distribution system
ordered by the Supreme Court and headed by Justice D. P. Wadhwa
has examined 22 Indian states. The system had “fallen into a
shambles” with large-scale diversion onto the black market,
Wadhwa declared. The number of forged ration cards in Andhra
Pradesh led to “a fraud of gigantic proportion.”

The food minister “is detached from reality,” said Mohan
Guruswamy, chairman of the Centre for Policy Alternatives in New
Delhi, who has written about changes needed for the public
distribution system. “He should own up to the problem and say
he is going to do something to rectify it. ”

India’s Cabinet this month approved a $745 million program
to computerize public distribution of food. The system will be
modeled on pilot programs in states like Chattisgarh and Kerala
that have introduced photo-identity cards, said Thomas.

‘Ask the Experts’

The first phase, already under way, allows grain shipments
to be tracked from central government warehouses to state
godowns, and then onward to the approximately 400,000 Fair Price
Shops where citizens purchase their subsidized quotas. This
process is a year behind schedule, said Thomas, who expects it
to be completed by 2013.

In a second phase, the shops themselves will be given
computerized systems, where photo-identity cards issued under a
separate biometric I.D. program run by the government will be
used to monitor rationing to individuals. This process could be
further delayed if the identity-card push does not complete the
process of registering the entire population, said Thomas.

When asked about the benefits computerization would bring,
he said: “Go talk to some experts.”

Thomas, 66, who is a professor in chemistry and ran the
department at Sacred Heart College in the southern state of
Kerala for two decades, declined to comment on specific measures
he had taken to improve the distribution system or assess his
performance since taking over the ministry. “I am not going to
make an assessment of that,” Thomas said. “We are doing it
better, things have improved.”

Satisfied

Thomas also said he was satisfied with the system of
leaving it up to individual states to distribute food, while his
ministry oversees procurement. In Uttar Pradesh, that means
Thomas’s ministry works with the state food minister, Raghuraj
Pratap Singh, who stands charged with attempted murder,
kidnapping, armed robbery and electoral fraud.

“We have a democratic system in the country, we have state
governments and state governments may be run by different
parties, but I cannot go into all those things,” Thomas said.
“This is a federal structure. We have to respect the state
governments. We can only suggest, we cannot impose.”

In Uttar Pradesh, home to the largest number of poor and
malnourished people in India, as much as 100 percent of the food
in several districts was looted, according to the Central Bureau
of Investigation. One politician, O.P. Gupta, the local
legislative representative from the district of Sitapur, was
indicted for the theft. He died in April and his son says he was
innocent. A whistleblower, Rajeev Yadav, told Bloomberg News
that Singh received as much as $200,000 a week as his cut from
the scam. Singh has not been charged over the food theft and has
denied any wrongdoing.

Corruption Perception

Seventy-four percent of Indians believe that the country
has grown more corrupt, and only a quarter feel that the
government of Prime Minister Manmohan Singh has been effective
in fighting graft, according to Transparency International’s
2010 Global Corruption Barometer. Indians consider political
parties to be the most corrupt institutions in the country, the
report said.

“I compliment our system, because with such a huge
population and different terrains we are able to distribute the
food grains satisfactorily,” Thomas said.

After being asked about how the computerization of the
distribution system would help reduce corruption, Thomas tossed
his papers down on the desk, picked up his phone and called an
assistant to escort the British-born Bloomberg News reporter
from the office.

“If you put questions like this” then the interview has
to end, Thomas said. “I wish you would not put it like this.
Sorry, we should stop with this now.”

Foreign journalists have an agenda to portray India in a
negative light, he said.

“You should not paint India as a corrupt country,” Thomas
said, jabbing his fingers as his assistant ushered the reporter
from the room. “We are the largest democracy in the world and
doing a lot better than Western nations.”